Revenue Sharing : 50:50 Not The Norm World Over!

Revenue Sharing : 50:50 Not The Norm World Over!
- Planet Bollywood Special Correspondant Let us know what you think about this story

The claim of producers/distributors, that in most of the foreign countries, including the USA, 50:50 revenue sharing between producers/distributors and multiplexes is the norm, may not be true after all.

The revenue-sharing terms in two leading chains of the US – Cinemark Cinemas and Regal Entertainment Group – are either a sliding scale or performance-driven, as would be clear from the extracts from the relevant sections of Form 10K of the Securities & Exchange Commission of the USA, reproduced hereunder. Form 10K is the annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934. The Securities & Exchange Commission (SEC) is the US equivalent of the SEBI in India. Extracts from Form 10K of Cinemark Cinemas:

Film rental costs are accrued based on the applicable box-office receipts and either the mutually agreed upon firm terms or sliding scale formula, which are established prior to the opening of the film, or estimates of the final mutually agreed upon settlement, which occurs at the conclusion of the film run, subject to the film licensing arrangement. Under a firm terms formula, the Company pays the distributor a mutually agreed upon specified percentage of box-office rece-ipts, which reflects either a mutually agreed upon aggregate rate for the life of the film or rates that decline over the term of the run. Under the sliding scale formula, film rental is paid as a percentage of box-office revenues using a pre-determined matrix based upon box-office performance of the film.

The settlement process allows for negotiation of film rental fees upon the conclusion of the film run based upon how the film performs. Estimates are based on the expected success of a film over the length of its run in theatres. The success of a film can typically be determined a few weeks after a film is released when initial box-office performance of the film is known. …. The final film settlement amount is negotiated at the conclusion of the film’s run based upon how a film actually performs.’ Extracts from Form 10K of Regal Entertainment Group:

‘Film Rental Fees: Under a sliding scale formula, the distributor receives a percentage of the box-office receipts using a pre-determined and mutually agreed upon film rental template. This formula establishes film rental predicated on box-office performance and is the predominant formula used by us to calculate film rental fees.’

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